Inventory management tips for small businesses in South Africa
Find out everything you need to know about getting inventory management done right for your small business.
Inventory management for small businesses
As a small business owner, this is when you follow steps to make sure you’ll always have enough stock to sell to your customers. To be able to do that, you’ll need to understand your sales patterns to avoid under-or over-stocking.
Please remember, you don’t want to have unhappy customers. They've spent petrol going to their favourite shop, only discovering you don’t have enough rice and vegetables. If running out of stock occurs frequently, customers may lose trust in your business and lose these customers.
There is nothing as good as first-hand experience in inventory management for a small business in South Africa. So, we spoke to Jen, the owner of Cyrus Farm Health Store, about it.
Check out what Jen has to say about how to get inventory management right
How do you do inventory management for your physical store and online store?
“So, I run both inventories separately. I don't mix them together because the physical store holds different inventory items compared to the online store.
So, I have a physical inventory list, and then obviously with my online store, there is no real inventory because I order per customer order.”
Do you have any tips for managing a shop's inventory?
"You need to ensure that you've got the correct and accurate details, so the name of the products and how much stock you want to keep per product. So, for example, if we take nuts, I order in bulk and then take stock once you put all of the nuts on the shelf.
“So, whether you're open every day or only once a week, you need to do a stock take afterwards and deduct what has been sold.
“You could automate that process with fancy software like accounting packages, etc. But if you're starting a business, you're not going to have the time to investigate all that and it's expensive. So, obviously, I wouldn't suggest paying all that money for that.
“Rather use a manual, old-fashioned way of doing business when you start out. You'll avoid costs that you really don't need at that time until you've grown and you are much bigger and more confident in your business profile I would not do that.
“Once your business grows and you find it a bit difficult to manage your inventory, upgrade to an accounting package. There are different accounting packages available for different needs but that would be my last resort.”
“Don't leave restocking to the last minute. So, for example, if I've got 10 packs of almonds. Then, what are my criteria to say, okay, we need to restock? So, it's when I have five packs of almonds left. So, when you recheck your stock, you need to send in your order and restock as soon as you reach that number five. Also, when I compile my almond order, I will check if I need more stock of other nut products to make that order worth my while. So, you don't want to do all that work for an order of five packs of almonds."
“You need to be clever when you go about stocking and restocking because you don't want to have to fork out money that you don't have just to refresh one item.”
Jen gave us some great tips to manage the inventory of a small business.
She also raised a good point about inventory management software that could be expensive but it doesn't have to be. In fact, it can be free, and easy to use, like the Yoco App, Yoco Portal software can help you with inventory management.
Also, take a look at our POS Integrations that include Loyverse, SalonBridge, Vend and Lightspeed. Companies like Sage also offer POS solutions. Do your research and decide on the best POS system to help your business grow at a cost you can afford.
Do you still want to know more? Read on for more inventory management tips.
Learn more about inventory management
Keep reading to get more tips to help improve the way you manage your business's inventory.
Organise your inventory and keep it that way
The process includes supplying goods to a storeroom or warehouse, and from there to the point-of-sale (POS) at your shop. If you’ve labelled all your stock correctly, they’ll be easy to count, find and make available to the customer.
Follow the first-in-first-out (FIFO) rule
It means stock coming in first you must sell first. Your inventory management must be based on this rule to avoid selling items that are past their sell-by date.
Organise your storeroom
Also, use the FIFO rule by arranging the layout of your storeroom in a specific way. Store fast-selling stock in the front of the storeroom, while the slower selling stock goes to the back.
Get rid of old stock
A small business can't afford a storehouse with lots of old stock. If the demand for that type of stock has gone, then remove it from the storeroom. Sell it at a great discount, even if there is some loss. If you can't sell it at all, then donate it to a charity.
Use the ABC inventory approach
A great way to manage stock is to divide the product into three groups and analyse them separately. Imagine the following scenario.
First, group A consist of high-priced items with low sales.
Next, group B, has average stock with average sales
Lastly, group C has low-cost stock with low sales. In this case, you would have to come up with a plan on how to improve those sales.
Apply minimum re-order levels on all stock
When inventory levels dip below specific levels, you’ll need to re-order from the supplier.
When running a small business, it’s OK to use a just-in-time ordering procedure where you order just enough inventory to keep customers happy.
Do regular stocktaking
By stocktaking, you can find out the value of your existing stock. Although you are recording sales, you are not automatically updating your inventory.
Physical stocktaking is necessary to balance what has been sold against what you still have.
Get someone else to manage your inventory
As your business grows, inventory management becomes more complicated and tedious.
Outsourcing inventory management could be cost-effective and save you much headache. Outsourced managers can store your inventory in their warehouse.
Now you’ve got enough time to focus on more important matters!
Where to store your inventory
It’s easy when you start small – storing your inventory can be in your home or garage.
But the challenge comes when the business is growing by leaps and bounds.
Much stock equals much finance that could be under threat of theft.
You also want to avoid renting unnecessary space at a large warehouse. Some companies offer just the right space you need at affordable rates, like XtraSpace.
Join Yoco and grow your business
Get in touch with us today to see how we can help your small business grow, from affordable card machines to free inventory management tools. We have you covered. So, go for it. Go from underdog to a household name.